Notable Trends in Indian Railways… (1/4)

RAILWAYS

January 2021 For updated information, please visit www.ibef.org Table of Contents

Executive Summary 3

Advantage India 4

Market Overview 6

Recent Trends and Strategies 15

Growth Drivers and Opportunities 21

Key Industry Contacts 34

Appendix 36

2 Executive summary

2. GROWING PUBLIC-PRIVATE PARTNERSHIP (PPP) 3. GROWTH INITIATIVES . Private sector companies are being encouraged to participate in rail . India will build its first railway station inside a tunnel at a height of projects, which were largely in the public domain. The cabinet approved 3,000 meters and length of 27 km on Bilaspur-Manali-Leh line in ‘participative models for rail-connectivity and capacity augmented Himachal Pradesh. projects’, which allowed private ownership of some railway lines. . Under the Union Budget 2020-21, the Government allocated Rs. . The second Tejas Express was flagged off in January 2020 on the 72,216 crore (US$ 10.33 billion) to the Ministry of Railways. Ahmedabad-Mumbai route. . Indian manufacturers, under the ‘Atmanirbhar Bharat’ initiative, . The government has announced two key initiatives for seeking private are being urged to develop an alternative to high-tech machines investments—running passenger trains by private operators across the that are needed to build high-speed rail speedily for the country’s railways network and redevelopment of railway stations across the first high-speed rail corridor connecting Ahmedabad and Mumbai. country. According to Indian Railways, these projects have the potential . Ast par of the National Rail Plan, Vision 2024 has been launched of bringing an investment of over US$ 7.5 billion in the next five years. for accelerated implementation of certain critical projects. Several high-speed rail corridors have been identified to this end.

1. WORLD’S THIRD- 4. MODERNISATION/ LARGEST RAIL NETWORK TECHNOLOGY

• As of FY19, the Indian UPGRADATION Railways had 13,523 . Indian Railways will use LiDAR passenger trains and 9,146 (Light Detection and Ranging) freight trains. technique, with laser-enabled • On the commercial front, equipment mounted on a freight traffic of Indian helicopter, to survey the surface Railways increased to 2 3 for the Delhi-Varanasi high-speed 1,221.39 million tonnes in rail corridor. FY19. As of January 2020, . In a bid to provide storm warnings freight traffic in FY20 and other weather updates to (provisional) stood at to 999.51 station masters and passengers, million tonnes. the Indian Railways installed 1 4 automated weather forecast equipment at 19 stations under the North Western Railway zone.

3 Advantage India

4 Advantage India

1. Growing demand 2. Opportunities ► Increasing urbanisation and ► Freight traffic is set to increase rising income (both urban and significantly due to rising rural) are driving growth in the investments and private sector passenger segment. participation. ► Growing industrialisation across ► Metro rail projects are being the country has increased freight envisaged across many cities traffic in the last decade. over the next ten years. ► India is projected to account for 1 2 40% of the total global share of rail activity by 2050.

4. Higher investment ADVANTAGE 3. Policy support INDIA ► FDI inflows in railway-related ► The Government has increased components stood at US$ 1.12 4 3 the scope of PPP beyond billion from April 2000 to providing maintenance and other September 2020. such supporting roles. PPP is ► Investment in Railway’s being utilised in areas such as infrastructure is estimated to redevelopment of stations, increase from US$ 58.96 billion building private freight terminals in 2013-17RE to US$ 124.13 and private container train billion in 2018-22E.^ operations. ► It is estimated that Railway’s ► Government has allowed 100% infrastructure would need an FDI in the railway sector. investment of Rs. 50 lakh crores (US$ 715 billion) between 2018- 30. Note: FDI - Foreign Direct Investment, ^As per CRISIL Infrastructure Yearbook 2017, RE - Revised Estimates, E - Estimate Source: Railway Budget 2019-20, Press Information Bureau, Department for Promotion of Industry and Internal Trade in source,, The Future of Rail Opportunities for energy report by International Energy Agency 5 Market Overview

MARKET OVERVIEW

6 Indian railways has two major segments

. Indian Railway (IR) is:

• a departmental undertaking of the Government of India, which owns and operates most of India's rail transport.

• overseen by the Ministry of Railways.

. AsY of F 19, IR had a total route network of ~67,415 kms.

. It operates more than 22,669 trains daily.

. It has 0.289 million wagons, 74,003 coaches and 12,147 locomotives.

. Over 23 million passengers travel by train daily in India. The passenger traffic Passenger stood at 8,438.46 million in FY19 and is expected to increase to 15.18 billion by FY20.

Railways

. Around 1,221.39 million tonnes of freight was transported via trains in FY19 and 2,165 million tonnes is expected to be transported in FY20. Freight . These include a huge variety of goods such as mineral ores, iron, steel, fertilisers, petrochemicals and agricultural produce.

Source: Ministry of Railways, Make In India, Railway Budget 2019-20, Indian Railways Statistical Publications 2019-20

7 Strong revenue growth for Indian railways

. Revenue growth has been strong over the years. Indian Railways’ revenue Gross revenue trends over the years (US$ billion) reached US$ 24.78 billion in FY20.

. Indian Railways has undertaken various measures to boost revenues 25.80 including:

• Passenger Earnings - introduction of new trains, operation of special 25.60 trains during peak seasons, running premium special trains with 25.69 25.40 dynamic pricing 25.56

• Freight Earnings - reduction in distance of mini rakes, withdrawal of port 25.20 congestion charge, rationalisation of Merry-go-Round policy

• Parcel Earnings - leasing parcel space to private parties, liberalisation 25.00 of parcel policy 24.80 25.02 • Other Earnings - adoption of bulk advertising rights, vinyl wrapping of trains, right of way charges 24.60 24.78 . Indian Railways is also looking at other areas of revenue generation such 24.64 as the following: a) Change in composition of coaches so that it can push 24.40 the more profitable AC coach travel; b) Additional revenue streams by monetising traffic on its digital booking IRCTC; and c) Disinvesting IRCTC 24.20

. RailTel, a PSU under the Railway Ministry, which provides fast and free 24.00 Wi-Fi across the Indian Railways network, announced its highest-ever

consolidated income of Rs. 11,660.05 million (US$ 158.48 million) for FY16 FY17 FY18 FY19 FY20 FY19-20. This income figure is a 12.3% growth over the consolidated income in FY18-19.

Note: CAGR - Compound Annual Growth Rate, E - Estimates, P - Provisional, FY - Indian Financial Year (April-March), PSU – Public Sector Undertaking Source: Ministry of Railways

8 Segment-wise revenue growth for Indian railways

Passenger earnings (in US$ billion) Earnings from freight (in US$ billion)

^CAGR 1.25% ^CAGR -0.68% 18.50 7.80 18.00 7.60 17.50 18.20 7.40 18.16

7.55 17.00 7.20 16.50

7.00 7.25 16.00 6.80 16.68 15.50 16.24 6.90 6.60 6.90

6.76 15.00 15.55 6.40 14.50 6.20 14.00 FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19 FY20P FY20P

. Revenue from passenger segment of Indian Railways increased at a CAGR of 1.25% to reach US$ 7.25 billion in FY20 from US$ 6.90 billion in FY16.

. Freight earnings stood at US$ 16.24 billion in FY20.

. Increased carrying capacity, cost effectiveness, and improved service quality will see Railways incremental share from freight movement increasing from 35% to 50% by 2020.

. With 637.2 km of metro rail in 13 cities and over two dozen metro projects lined up, India’s metro rail network is expanding at a fast pace.

. In November 2020, Indian Railways freight loading stood at 109.68 million tonnes, up from 100.96 million tonnes in November 2019. The Indian Railways earned Rs. 10,657.66 crore (US$ 1.44 billion) from freight loading—a 4% or Rs.449.79 crore (US$ 61.13 million) increase y-o-y.

Notes: CAGR - Compound Annual Growth Rate, FY-Financial Year, Exchange Rates used are averages of the year, P - Provisional Source: Ministry of Railways, News Article

9 Freight accounts for more than two-thirds of railway’s revenues

. Freight business for Indian Railway is supported by 9 commodities, Revenue break-up by segment (FY20) few of them being coal, iron, steel, iron ore, food grains, fertilizers, petroleum products. . Indian Railways’ freight business increased nearly seven times in the last fifty years - from 167.39 million tonnes in 1970-71 to 1159.55 4.1% million tonnes in 2017-18. 3.3% . Freight remains the major revenue earning segment for Railways, accounting for 64% of the total revenue in FY20, followed by the Freight passenger segment. . Profit from the freight segment is used to cross-subsidise the Passenger passenger segment. 28.6% . Dedicated Freight Corridor Corp. of India Ltd. (DFCCIL) is already Other coaching building two freight corridors - Eastern Freight Corridor from Ludhiana to Dankuni (1,856 km), and Western Freight Corridor from 64.0% Dadri to Jawaharlal Nehru Port (1,504 km), at a total cost of Rs. Sundry 81,000 crore (US$ 11.59 billion). . A total of 1,231 freight customers are availing E-payment facility since November 2019. . On July 27, 2020, the average speed of freight trains was 46.16 kmph, which is more than double as compared to last year on the same date (22.52 kmph), and total loading stood at 3.13 million tonnes. . Indian Railways plans to achieve 2,024 MT (metric tonne) loading in 2024 from the current 1,200-1,300 MT.

Note: Other Coaching includes service coaches such as pantry cars, parcel vans, mail vans, etc, * - Provisional Source: Railway Budget 2019-20, Ministry of Railways

10 Passenger volumes witness healthy growth

. Train travel remains the preferred mean for long-distance travel for Trends in passenger volumes (in billions) majority of Indians. 9.00 . Increase in the demand for passenger trains is supported by urbanisation, improving income standards, etc.

. The punctuality performance of Indian Railways for mail and express 8.80 trains increased to 75.67% during April-December 2019 as compared to 68.19% in the same period last year. 8.60 . DuringY F 20P, passenger traffic in the country reached 8.10 billion.

. In September 2020, Indian Railways planned to run more special 8.40

trains as the government further relaxed COVID-19 related 8.44 restrictions to revive the economy. 8.20 8.29 8.22

8.00 8.10 8.10

7.80

7.60 FY16 FY17 FY18 FY19 FY20P

Note: CAGR - Compound Annual Growth Rate, E - Estimate, FY - Indian Financial Year (April-March), P - Provisional Source: Make In India, Ministry of Railways

11 Strong growth in freight traffic

. The Government is investing heavily in building rail infrastructure in Freight traffic (million tonnes) the country. 1,400 ^CAGR 2.28% . With increasing participation expected from private players, both domestic and foreign, due to favourable policy measures, freight traffic is expected to grow rapidly over medium to long term. 1,200

. Freight traffic carried by Indian Railways stood at 1,208.34 million 1,221.39

tonnes in FY20. 1,000 1,208.34 1,159.57 1,107.10 . In November 2020, the Indian Railways loading stood at 109.68 1,104.20 million tonnes (MT), including 48.48 MT of coal, 13.77 MT (iron ore), 800 5.1 MT (food grains), 5.41 MT (fertilisers) and 6.62 MT (cement, excluding clinker). 600 . The average wagon loading per day in November 2020 was 58,726, which was 4.6% higher than October 2020 (56,128 wagons). 400 . In November 2020, India Railways announced that 40% of dedicated freight corridor (DFC) will be opened for traffic by end-FY21, while the entire 2,800 km route will be completed by June 2022. 200

0 FY16 FY17 FY18 FY20 FY19P

Note: CAGR - Compound Annual Growth Rate, FY - Indian Financial Year (April-March), P - Provisional,, ^CAGR is up to FY20 Source: Ministry of Railways, Vision 2020, Press Information Bureau

12 Rising export of railways sector

. Indias wa among the top 20 exporters of railways globally as of Export of Railways (US$ million)^ 2019. 700 . India’s export of railways grew at a CAGR of 52.52% during 2010- ^CAGR 52.52% 2019 to reach US$ 635 million. 600 . In 2019, Train 18, Indian Railways’ fastest engine-less self-propelled

train, gained several queries for export. 635.00

. On July 28, 2020, Railways handed over 10 Broad Gauge (BG) 500 locomotives to Bangladesh, under grant assistance from the 507.90 Government of India. 400 . In January 2021, Hyundai Motor India Ltd. (HMIL) has announced that it has exported 125 cars to Nepal via the Indian Railways. The 300 export is claimed to be eco-friendly and the first-ever by the company. With this step, the company is aiming to reduce carbon 303.29 footprint by 20,260 tonnes. 200 178.97 100

0 2016 2017 2018 2019E

Note: CAGR - Compound Annual Growth Rate, ^Exports of Railway, Tramway Locomotives, Rolling Stock, Equipment, Data is the latest available, E-Estimated Source: UN Comtrade, News Articles

13 Key players supporting Indian railways

. Key organisations supporting Indian Railways

. Navratna PSU under India’s Ministry of Railways 1 . Carrier, terminal operator and warehouse operator

• SPV set up under the Ministry of Railways • Undertakes planning and development; mobilisation of financial resources; construction, maintenance and operation of the Dedicated Freight Corridor 2 (DFC)

SPV created by the Government of India 3 Builds engineering works required by Indian Railways

• Mini Ratna PSU with one of the largest neutral telecom infrastructure providers in the country • Strives to modernise train control operation and safety system of Indian 4 Railways

Note: This list s indicative Source: Edelweiss – Press releases

14 RECENT TRENDS AND STRATEGIES

RECENT TRENDS AND STRATEGIES

15 Notable trends in Indian railways… (1/4)

1 Demand for urban transport • There is a rapid increase in demand for urban mass transportation systems in the country. Several metro rail projects are in progress to improve connectivity within cities. • The central Government inaugurated the Pune Metro Rail project on December 24, 2016. The metro line would have 30 stations and the 1st phase would cover 31.25 km. The project is expected to be completed by 2021 at a cost of US$ 1.67 billion. In January 2019, the Department of Economic Affairs (DEA) and the French Development Agency (AFD) signed a credit facility framework agreement to extend funding to Rs. 20.27 billion (US$ 280.96 million) 2 M-ticketing and e-ticketing • As of July 2018, Indian Railways decided to start accepting soft copies of documents placed in DigiLocker of customers. In May 2018, IRCTC introduced its mobile android app to be utilised by IRCTC E-wallet users to book E-rail tickets. In FY19, the internet ticketing segment contributed 12.35% to IRCTC’s revenue. • In October 2019, Indian Railway launched One Touch ATVM for fast ticketing at 42 suburban stations of Central Railway. 3 International investment • IR has attracted foreign investment through strategic alliances with various countries over the last few years. • In November 2019, Indian Railways entered into procurement cum maintenance agreement with Madhepura Electric Locomotive Pvt Ltd. (MELPL), a joint venture of Indian Railways and France-based Alstom to manufacture 800 electric locomotives for freight service. 4 Travel insurance scheme • Railways rolled out its insurance scheme for passengers, under which they can buy a premium of 1.52 cents while booking a ticket to get an insurance cover of up to US$ 1.5 thousand.

Source: DPIIT 16 Notable trends in Indian railways… (2/4)

5 Semi high-speed train projects • IR intends to look for cost effective options to increase speed to 160-200 km per hour on existing routes such as Delhi-Chandigarh and Delhi-Agra. • In February 2019, the Government launched India’s first semi-high-speed train, Vande Bharat Express, to run between Delhi and Varanasi. In October 2019, second semi-high-speed train called Delhi-Katra Vande Bharat Express was launched. • In November 2020, Indian Railways’ Rail Coach Factory (RCF), in Kapurthala, rolled out a semi high-speed double-decker coach. Equipped with the modern amenities and design, the coach can run at a top speed of up to 160 km/h.

6 Bullet trains • For the upcoming Mumbai-Ahmedabad bullet train project, 24 bullet train sets are planned to be acquired from Japanese companies through tendering process. • The estimated value of the project is US$ 14.52 billion, which will reduce the duration of the journey by 2 hours. Construction of the corridor is expected to be completed by 2023. • Average speed of faster trains will increase from the existing 110-130 kmph to 160-200 kmph, respectively. • On November 26, 2020, National High Speed Rail Corporation Limited (NHSRCL) signed an agreement with L&T to design and construct 47% alignment works for Mumbai-Ahmedabad bullet train project.

7 High-speed trains projects • Indian Railway has planned to build 7 high-speed rail corridors to provide faster rail connectivity across the country at a cost of US$ 17 million. • In October 2020, Jindal Steel and Power Limited (JSPL) became the first and only Indian manufacturer to develop 60E1 1175 heat treated (HT) rails that are suitable for high-speed and high-axle load applications. These rails are primarily used by metro rail corporations, high-speed corridors and bullet trains.

Source: DPIIT 17 Notable trends in Indian railways… (3/4)

8 New services/programmes launched • Nearly 4,100 km of railway lines were to be commissioned in 2018-19 • In November 2020, Indian Railway launched a completely digitised online Human Resource Management System (HRMS)—a high thrust project for Indian Railways to leverage improved productivity and employee satisfaction. • In December 2020, Railofy, a Mumbai-based startup, introduced a new feature that provides real-time PNR status and train journey information on ‘WhatsApp’ platform. 9 Security Protocols and Procedures • The Indian Railways reviewed its security, crowd management and enforcement to meet the COVID-19 protocols as the footfalls are likely to increase ahead of the festive season. The new mandate includes the field officers to conduct intensive awareness campaigns among passengers on guidelines issued by the Railway administration to prevent outbreaks in trains and at stations. • A new campaign ‘Meri Saheli’ was launched to provide safety to female passengers and effectively respond to any security-related issues faced or seen by female passengers. This initiative is two-pronged and will also aim to curb human trafficking of women and children. 10 Enhanced safety features • To suit the new requirements of passengers amidst the COVID-19, the temperature and air-circulation settings in AC train coaches have been modified by the Indian Railways. • In November 2020, Indian Railways developed anti-COVID-19 coach to prevent the spread of coronavirus. This anti-COVID-19 coach has hands- free water tanks and flushes; copper-coated handles and locks.

Source: DPIIT 18 Notable trends in Indian railways… (4/4)

11 Scheduling Amendments • Indian Railways is scheduled to run 392 festival trains to and from Kolkata, Lucknow, Patna and Varanasi starting from mid-October 2020 until end-November 2020 to cater to the growing demand during Durga Puja, Dussehra, Diwali and Chhatt Puja festivities. • Furthering the revenue maximisation agenda, these special trains will have 10-30% higher ticket prices including a special surcharge.

12 Investment • Under the Union Budget 2019-20, the Government allotted Rs. 2,200 crore (US$ 304.92 million) for gauge conversion, Rs. 700 crore (US$ 97.02 million) for doubling tracks, Rs. 6,114.82 crore (US$ 847.51 million) for rollingstock and Rs. 1,750 crore (US$ 242.55 million) for signalling and telecom.

13 Hospital management information system • In November 2020, Indian Railways (with the objective of bringing hospital management on a single architecture to prevent pilferage and making operations seamless) entrusted RailTel Corporation of India Limited (“RailTel”) with the implementation of a hospital management information system (“HMIS”)—an integrated clinical information system for its 125 health facilities and 650 polyclinics across India for improved hospital administration and patient healthcare.

Source: DPIIT 19 Strategies adopted by Indian railways…(1/2)

REVENUE-BASED STRATEGIES . Provision of online rail bookings, hotel reservations and retiring rooms by IRCTC adds to revenue of Indian Railways. IR is focusing on international tourists and have also produced many tour 1 packages for foreigners. . Indian Railway has set a target of US$ 5.95 billion in revenue from monetising railways in the next 10 years. By doing so, IR aims to increase earnings through traditional as well as non-traditional sources and reduce expenditure. . Plans are in place to remove pantry car services from 300 trains and replace them with AC-3 tier coaches to increase revenue by Rs. 1,400 crore. Meal service will rely on base kitchens at railway stations, e-catering and train-side vending machines according to the Railway Ministry. . Replacing reusable linen sets with disposable linens is another revenue sharing strategy under review since the pandemic. Contracts are being distributed to private vendors for selling disposable sheets, towels and pillows at train stations to prevent covid outbreaks. This will reduce the railways maintenance overheads by passing the cost to the passenger. . These decisions have been made in response to a revenue and expense audit report compiled by the AIRF. TURNAROUND STRATEGIES FOR FREIGHT TRAFFIC . Axle load was increased from 20.3 tonnes to 22.9 tonnes and 25 tonnes for selected routes and 2 freight discounts were offered to customers offering high tariffs. . The average speed of freight trains would increase to 50 kmph and Mail/Express trains to 80 kmph by end of 2020. . Freight rates on cement, coal, urea, kerosene, LPG and food grain and pulses have been hiked by 10% to bring additional revenue of US$ 655.1 million per year.

Source: News Articles

20 Strategies adopted by Indian railways…(2/2)

GO ECO-FRIENDLY . The Railway Minister, Shri. Piyush Goyal, announced on November 29, 2020, that tea will be sold in environment-friendly 'Kulhads' (earthen cups) in place of plastic cups at all railway stations in the 3 country. Currently, >400 railways stations serve tea in ‘Kulhads’. This strategy will be the contribution of the Indian Railways towards a plastic-free India.

TURNAROUND STRATEGIES FOR PASSENGER TRAFFIC . Farer fo premium classes were reduced to compete with airlines, luxury buses and personal 4 transport vehicles. . The length of popular trains was increased from 16-18 coaches to 24-26 coaches. . Private participation is encouraged. Information Technology was used to make ticket reservation more feasible to passengers along with an airline-style upgradation facility from lower class to higher class. . The speed is expected to be raised to 160 kmph on Delhi-Mumbai and Delhi-Howrah routes by 2022-23. The passenger trains have got approval to raise 60% increase in average speed. . Rajdhani train journeys will become fully overnight. . In September 2020, the Indian Railways announced the ‘Clone Train Scheme’, wherein it plans to run a clone train with the train of the same number, to help and provide relief to waitlisted passengers over heavy passenger traffic routes

Source: News Articles

21 GROWTH DRIVERS AND OPPORTUNITIES

GROWTH DRIVERS

22 Strong demand and policy support driving investments

Government focus on infrastructure building

Increasing Growth of freight private sector traffic due to participation industrialisation

Improved safety Rising demand and for urban mass modernisation transportation

23 Rising income and urbanisation driving passenger traffic growth

GDP per capita at current prices (US$) Urbanisation in India^

3500 600 37.38 38 37 3000 500 542.74 483.10 36 400 460.78 2500 3273.85 429.07 35

3006.54 34.93 300 34 2000 2762.31 34.03

2538.82 33 200 1500 2334.14 32.78 32 2134.75

1982.70 100 31

1000 1749.16 0 30 500 2015 2020F 2025F 2018E 0 Urban Population (in millions)

2016 2017 2018 2019 2020 2021 2022 2023 Urban population as percentage of total population

. Increasing incomes in urban and rural areas have made rail travel affordable to large number of Indians.

. Improvement of urban-rural connectivity has been another major contributor to the growth of Railways n the country.

. Population residing in urban areas is expected to increase from 460.78 million^ in 2018 to 542.74 million^ in 2025F. The percentage of India’s total population residing in urban areas is expected to increase from 34.03%^ in 2018 to 37.38%^ in 2025F.

Note: ^data relates to mid-year, E - Estimate, F - Forecast Source: Ministry of Railways, IMF World Economic Outlook April 2018, United Nations World Urbanisation Prospects 2018

24 Infrastructure development

. It is estimated that India will require US$ 4.5 trillion of infrastructure investment by 2040 to Infrastructure Investment (US$ billion) enhance economic growth and community well being. . As per the Union Budget 2020-21, Ministry of Railways has been allocated Rs. 72,216 900 crore (US$ 10.33 billion).

. InY F 20, 15 critical projects of around 562 kms track length worth Rs. 5,622 crore (US$ 800 797.56 million) were completed, and out of these, 13 were commissioned by railways. Railways completed electrification of around 5,782 route kms during the same year. 700 778.90 . Rail Land Development Authority (RLDA) is working on long-term planned projects worth 600 Rs. 50,000 crore (US$ 6.74 billion) for redeveloping 123 railway stations, across the country, on a self-sustainable model, which is in line with the smart city projects. The 500

committee aims to meet the cost of redevelopment by leveraging commercial 577.19 development of spare railway land and air space. Indian Railways aims to issue tenders 400 for 50 more stations by March 2021 in addition to the list of 123. 300 . Indian Railways is planning annual capital expenditure of Rs. 2 lakh crore (US$ 27.18 369.28 billion) until FY24 in line with the robust infrastructure upgrade envisaged for the country- 200

wide railway network. 124.13

. In November 2020, Hindustan Construction Company (HCC), in a joint venture with 100 58.96 Vensar Constructions Company (VCCL), bagged two orders totalling Rs. 236 crore (US$ 31.03 32.05 million) from the Northeast Frontier Railway. This is a part of the Bairabi-Sairang 0 new broad gauge rail line in Mizoram.

. In December 2020, a Northeast Frontier Railway (NFR) spokesperson stated that at least 2008-12 2018-22E

six construction projects, including three new lines and three double-line projects, will be 2013-17RE completed in 2021. Among these three new rail line projects, two will be international lines, Railways infrastructure investments connecting to neighbouring countries—Bangladesh and Nepal. Total infrastructure investments

Notes: RE - Revised Estimates, E- Estimate Source: CRISIL Infrastructure Yearbook 2017, Economic Survey 2019-20, Railway Book, News Article 25 Expanding scope of public private partnership (PPP)

. In December 2012, the cabinet approved the new policy of participative models for rail-connectivity and capacity augmented projects. The policy addressed the issues of ownership of the railway line and repayment of investment. . Since the launch of the policy, railway authorities have received various proposals from private investors and have already given approval (can now acquire land and begin construction) for four port connectivity projects to ease congestion. . Areas proposed for private investment during this period would include elevated rail corridor in Mumbai, some parts of dedicated freight corridor, freight terminals, redevelopment of stations and power generation/energy saving projects . Other measures taken/proposed include: • Setting up of a modern signalling equipment facility at Chandigarh through PPP • Construction of new lines - Bhupdeopur-Raigarh (Mand Colliery) and Gevra Road-Pendara Road; Doubling of Palanpur-Samakhiali section through PPP. • Setting up of 2 locomotive plants through PPP is crucial for the development of infrastructure sector. • Setting up joint ventures (JV) with major public sector customers for fulfilling the requirements of new lines. . As per the Union Budget 2019-20, Government enhanced the metro railway initiative by encouraging more purchasing power parity initiatives and ensuring completion of sanctioned works, while supporting transit-oriented development (TOD) to ensure commercial activity around transit hubs. . Purchasing power parity projects in railways is expected to receive investment of Rs. 50 trillion (US$ 750 billion) by 2030. . Indian Railways and AltPro, a Croatian company, signed a deal worth Rs. 450 million (US$ 6.06 million) to upgrade the safety and signaling equipment for rolling stock and infrastructure. . Western Railways division has signed a deal with the logistics partner of Amazon India for speedy transportation of parcels in Rajdhani Express. The division completed its first consignment journey from Mumbai to New Delhi in October 2020. The deal stipulates consignment deliveries for 113 days form October 2020 to February 2021 with an estimated good transportation of 2,712 tonnes; this will help generate a revenue of Rs. 2 crore. . In July 2020, the Ministry of Railways has invited Request for Qualifications (RFQ) for private participation in operating passenger train services across 109 Origin Destination (OD) routes. As part of the plan, the railways will introduce 12 trains in FY23, 45 in FY24, 50 in FY26 and 44 more in the next fiscal, taking the total number of trains to 151 by the FY27. The project would entail private sector investments of about Rs. 30,000 crore (US$ 4.09 billion).

Notes: PPP - Public Private Partnership; MUTP-III: Mumbai Urban Transport Project-III Source: Ministry of Railways, Make in India 26 Modernisation strategy … (1/2)

To modernise Indian Railways, the focus is on Key focus areas two fundamental drivers, safety and growth along with a 5-pronged strategy: Stations Track and Rolling Core assets Signalling and . bridges stock Modernise core assets - key revenue terminals generating assets High- Dedicated Revenue models PPPs Land speed . Explore new revenue models - to meet the freight corridors trains funding needs for modernisation and growth

. Review projects - to ensure financial Projects Review of existing and proposed projects viability, social benefits and timely implementation Indigenous Enablers ICT Safety development . Focus on enablers - for a holistic and long- term approach to modernisation and Human Resources Funding Organisation execution resource

. Mobilise resources - to capitalise on an opportunity

Information Technology - to improve operational efficiency

Note: ICT - Information and Communication Technology, PPP - Public Private Partnership Source: :Ministry of Railways

27 Modernisation: new theme of Indian railways… (2/2)

2. ADARSH SCHEME 3. INCREASING OPERATIONAL EFFICIENCY . As of June 2019, 1,253 stations were identified under the . Design and development of 5500 HP WDG5 diesel locomotive for faster, longer scheme, of which 1,149 were developed (as per norms) and heavier trains. Development of 25 KV HV connector for multiple operation of by October 2019. WAP5 locomotives with 1 pantograph in raised condition. . Total allocation for the scheme increased from Rs. . Development of high-sensitivity thermal imaging camera with online scanning 1,470.79 crore (US$ 228.21 million) in 2017-18 to Rs. facility to improve the reliability of electric traction system. 3,422.57 crore (US$ 467.25 million) in 2019-20. . Launch of a zero-based timetable to increase efficiency by pruning 600 trains and . Moula -Ali station has been developed under Adarsh eliminating halts at 10,200 train stations; this will boost revenue by Rs. 2,000 crore Station Scheme at a cost of Rs. 3.5 crore (US$ 0.49 (US$ 262 million) million). . About 4,000 unmanned level crossings have been eliminated in one year by the Indian Railways. In August 2020, freight trains ran about 94% faster than in August 2019. . 370 railway stations in the Northeast Frontier Railway (NFR) region have been enabled 1. TRACK UPGRADATION AND with Wi-Fi for free access as part of India’s move towards digitalisation. WELDED RAILS . Sleepers have been upgraded from wooden, steel and CST-9 to PSC 4. UNRESERVED TICKETING sleepers. . Heavier section and high tensile SERVICES (UTS) strength rails are being used (52 . UTSs wa made functional at 5,778 kg/60 kg 90 UTS rails are being used 2 3 locations with 10,760 terminals. in place of 90 R/52 kg 72 UTS rails). Currently, 90% of unreserved tickets . Under the Union Budget 2019-20, are generated through UTS. The app 36,000 km rail track is being targeted received 10,62,560 new users till for renewal January 2019. . Replacing analogue type machines . By June 2019, 3.87 lakh passengers with digital type machines and 1 purchased the unreserved tickets promotion of better and improved 4 through online application. welding techniques.

28 Dedicated freight corridor… (1/2)

OBJECTIVES

1 Increase rail freight share 6 Reduce unit cost of through customised transportation and increase logistic services productivity 1 6

2 Segregate freight 5 Adopt high-end and passenger lines 2 5 technology for real-time for focused approach data analysis

3 4 3 Create additional 4 Introduce time-tabled freight capacity to freight services to ensure meet demand better services

Note: Ministry of Railways

29 Dedicated freight corridor… (2/2)

. DFCCIL, a special purpose vehicle, was set up for implementing the DFC project under the administrative control of Ministry of Railways.

. The plan is to construct dedicated freight lines along the eastern (1856 km route length) and western (1504 km route length) parts of India

. Total length: 2,8243 kms; total estimated cost: US$ 11.66 billion as on September 2019; financial progress stands at 63.6% and physical progress stands 67.5%.

. The eastern wing of the DFC is being funded by the World Bank and western wing is being financed by the Japanese International Cooperation Agency.

. The Japanese International Cooperation Agency has granted Rs 8,553 crore (US$ 1,167.68 million) for phase 1 of the DFC.

. The World Bank granted loan of US$ 1,100 million for EDFC-2 and sanctioned loan of US$ 650 million for EDFC-3 in October, 2016.

Western Corridor Eastern Corridor

Uttar Pradesh -> Haryana -> Punjab -> Haryana -> Uttar Rajasthan -> Gujarat -> Pradesh -> Bihar -> West Maharashtra Bengal/Jharkhand

Length: 1506 kms Length: 1337 kms

Note: DFC - Dedicated Freight Corridor, DFCCIL - Dedicated Freight Corridor, Corporation of India Limited, JV - Joint Venture, EDFC - Eastern Dedicated Freight Corridor Source: Ministry of Railways

30 Policy and regulatory framework… (1/4)

Foreign Direct Investment (FDI)

. 100DI % F under automatic route is permitted for approved list of projects

Automobile Freight Train Operator Scheme 2013 . To increase its share in automobiles transportation, Indian Railways notified a new scheme in March 2013, Automobile Freight Train Operator. The scheme provides logistic service providers and road transporters an opportunity to introduce their own special wagons to run on the railways’ network and avail of freight rebates in return. The requirements for the scheme are laid down as under:

• Companies with minimum net worth of US$ 3.7 million or annual turnover of US$ 5.5 million are eligible to participate in this scheme.

• A registration fee of US$ 0.9 million is required to be paid to the Railway Ministry on approval as AFTOs.

• Companies are required to introduce at least 3 rakes and make them operational within 6 months from the commissioning of the 1st rake.

• The freight rates would be notified from time to time for specific stock to be moved by AFTOs.

• The freight rebate would be incorporated in the freight rates specified for transport of automobiles.

• Special wagons would be designed and developed by Research, Design and Standards Organisation (RDSO) for induction by 3rd party logistics providers and road transporters.

• Each rake is to have a capacity to carry 318 small cars. The rake should be tested by RDSO.

. To make the policy more effective, Ministry of Railways liberalised the AFTO policy by reducing registration fees from Rs. 5 crore (US$ 0.78 million) to Rs. 3 crore (US$ 0.47 million). Also, the requirement of minimum procurement of at least 3 rakes under the scheme has been relaxed to 1 rake.

Source: News Sources

31 Policy and regulatory framework… (2/4)

R3i policy

. The policy aims to attract private sector participation in rail connectivity projects to create additional rail transport capacity.

. The policy allows for 4 models: (a) Cost Sharing-Freight Rebate; (b) Full Contribution- Apportioned Earnings; (c) Special Purpose Vehicle (SPV); and (d) Private Line.

R2CI

. This new policy was initiated to improve rail connectivity to coal and iron ore mines.

. The policy offers the developer involved in the construction of the line to levy a surcharge on the freight over a period of 10-25 years.

. The policy has two models: Capital Cost and SPV Models. The Capital Cost Model is relevant when there are 2 players, whereas the SPV Model is intended for a large number of players.

Public Private Partnership (PPP)

. Connectivity to the major ports through PPP funding. Approval has been granted for 7 ports amounting to US$ 0.7 billion.

. Development of the major stations to equip them with international level of amenities and services.

. As of October 2020, the Railway Ministry issued a policy to develop shed facilities at small/roadside railway stations aimed at augmenting terminal capacity through the participation of the private sector. Private parties are allowed to develop a goods wharf, utilities for labourers (resting space, drinking water, etc.), approach roads, loading and unloading docks and other related infrastructure.

. All facility developments will require approval from the Indian Railways and need to comply with their designs, standards and specifications.

Note: R3i - Railways' Infrastructure for Industry Initiative, SPV - Special Purpose Vehicle, R2CI - Railways Policy for Connectivity to Coal and Iron Ore Mines Source: Ministry of Railways, Make in India website

32 Policy and regulatory framework… (3/4)

Railway announcements . Under the Union Budget 2020-21, the Government of India has allocated Rs. 72,216 crore (US$ 10.35 billion) as capital support for Indian Railways.

. For passenger safety, a Rashtriya Rail Sanraksha Kosh will be created with a corpus of Rs. 1 lakh crore (US$ 15.61 billion) over a period of 5 years. It is proposed to feed about 7,000 stations with solar power in the medium term.

. By 2024, Indian railways will run completely on electricity.

. By 2019, all coaches of Indian Railways were fitted with bio toilets. In the next 3 years, the throughput is proposed to be enhanced by 10%.

. Indian Railways has completed eight major capacity enhancement projects by taking advantage of the coronavirus lockdown. These projects included three super critical projects with a combined length of 68km, three critical projects with a combined length of 45km, upgradation of the 389km railway line from Jhajha in Bihar to Pandit Deen Dayal Upadhyaya Junction in Uttar Pradesh and a new 82km port connectivity line to Paradip.

. Ast a par of the Railways’ plans to upgrade its network, the Ministry announced that all non-AC sleeper coaches will be replaced by AC coaches for trains running >130 kmph. This move has been taken as a technical necessity for high-speed trains with the bonus of improving passenger experience.

Wagon investment scheme

. Indian Railways launched the Wagon Investment Scheme in 2005 to offer freight rebates and supply a guaranteed number of rakes for a period of 7 to 15 years for different types of wagons.

. Ministry of Railways proposed to set up 5 wagon factories in Secunderabad, Bardhaman, Bhubaneswar/Kalahandi, Guwahati and Haldia under the JV/PPP model.

. Till May 2019, 77 general-purpose rakes were approved by IR under the GPWIS policy for multiple private investors. Two rakes are already operational in the east coast zone.

33 Policy and regulatory framework… (4/4)

Key modernisation initiatives . Government of India preponed its target of install bio-toilets in the entire fleet of coaches by 2019. As of March 2018, bio-toilets were installed in around 60% of all passenger-carrying coaches of Indian Railways.

. Introducing 24/7 All - India helpline number through which passengers could address their problems on a real-time basis. Toll free number, 138, has been launched as 24/7 All-India helpline number and availability of toll-free number, 182, for security related complaints.

. In an initiative to decarbonize rail transport, Indian Railways will be collaborating with various public sector enterprises to speed up the process of electrification of railway tracks. Electrification of 6,000 km of routes was planned for 2018-19.A total of 1,106 Route kilometre (RKM) has been electrified across the entire Indian Railways network.

. In February 2019, Government of India launched Rail Drishti Dashboard to promote transparency and accountability. It brings information from various sources on a single platform and gives access to key statistics and parameters to every citizen of the country.

. In October 2019, Indian Railways launched 09 ‘Sewa Service’ trains to connect smaller towns around major cities.

. In October 2019, RailTel completed phase-I execution of NIC E-office for Indian Railways, and 58 units are using E-office for paperless work.

Participative models attracting capital

. This policy supersedes the R3i and R2CI policies notified earlier.

. The policy provides for supplementing Government’s investment in rail infrastructure projects by private capital flows.

. The policy contains the following models: non-Government railway; JV with equity participation by railways; capacity augmentation through funding by customers; capacity augmentation - annuity model applicability; and BOT.

. Few projects undertaken under the participative policy of Ministry of Railways include Jaigarh Port-Digni Port, Hamarpur-Rewas Port, Chiplun-Karad, Vaibhavwadi-Kolhapur and Indore-Mammad.

Source: Ministry of Railways, Railway Budget 201 - 16, News Articles; Press Information Bureau

34 Increasing FDI inflow

. From April 2000 to September 2020, FDI inflow in railways-related FDI inflow (US$ million) components industry stood at US$ 1.12 billion.

. In July 2020, the Ministry of Railways decided to create a special cell, 1107.6 1100 138.32 Project Development Cell (PDC), in the railway board to increase investments and inflow of foreign direct investment (FDI). 23.12 98.54 900 87.57 73.99 700 129.73

236.93 500

300 107.66 29.85

132.82 100 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY01-FY11 FY01-FY20

Note: FDI - Foreign Direct Investment Source: : Department for Promotion of Industry and Internal Trade

35 Key Industry Contacts

36 Key industry organisations

Agency Contact Information

Address: Rail Bhavan, Raisina Road New Delhi-110001 Indian Railways Tel: 91 11 23411173 Website: www.indianrail.gov.in

Address: Rites Bhawan, Gurgaon Sector 29, Gurgram, Haryana - 122002 RITES Limited Tel: 91 124 2571666/2818999 Fax: 91 124 2571660 Mail: [email protected] Website: www.rites.in

37 Appendix

38 Glossary

• CAGR: Compound Annual Growth Rate

• FDI: Foreign Direct Investment

• FY: Indian Financial Year (April-March)

• FY12 implies April 2011 to March 2012

• DFC: Dedicated Freight Corridor

• DFCCIL: Dedicated Freight Corridor Corporation of India Limited

• PPP: Public-Private Partnership

• IIP: Index of Industrial Production

• R2CI: Railways Policy for Connectivity to Coal and Iron Ore Mines

• R3i: Railways' Infrastructure for Industry Initiative

• CST - 9: Central Standard Trial-9,

• SPV: Special Purpose Vehicle

• US$ : US Dollar

• Wherever applicable, numbers have been rounded off to the nearest whole number

39 Exchange rates

Exchange Rates (Fiscal Year) Exchange Rates (Calendar Year)

Year Rs. Equivalent of one US$ Year Rs. Equivalent of one US$ 2004-05 44.95 2005 44.11 2005-06 44.28 2006 45.33 2006-07 45.29 2007 41.29 2007-08 40.24 2008 43.42 2008-09 45.91 2009 48.35 2009-10 47.42 2010 45.74 2010-11 45.58 2011 46.67 2011-12 47.95 2012 53.49 2012-13 54.45 2013 58.63 2013-14 60.50 2014 61.03 2014-15 61.15 2015 64.15 2015-16 65.46 2016 67.21 2016-17 67.09 2017 65.12 2017-18 64.45 2018 68.36 2018-19 69.89 2019 69.89 2019-20 70.49 2020 74.18 2020-21 73.51 2021* 73.25

Note: As of January 2021 Source: Reserve Bank of India, Average for the year

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